TaxTalk

Did you or a dependent start college this year? Are you taking classes to further your career? You may not just be benefiting your mind, but also your tax situation. Here’s a few examples: 

American Opportunity Credit: Set to expire at the end of 2012, this allows a credit of up to $2,500 for the qualified tuition and related expenses paid for each eligible student. This credit can be claimed for the first four years of post-secondary education for each eligible student enrolled at least half time in a qualified program. Eligible expenses include tuition, required fees and the cost of required books and software for courses. The American Opportunity Credit is unique because 40 percent of it is a refundable credit, which allows taxpayers with no tax liability to receive this portion of the credit as a refund.

Lifetime Learning Credit: Taxpayers may be eligible for a credit of up to $2,000 each year for the total qualified tuition and related expenses paid during the tax year for all eligible students enrolled in a qualified educational institution. Unlike the American Opportunity Credit, the Lifetime Learning Credit is not based on the student’s workload and is not limited to the first four years of postsecondary education. Expenses for graduate-level degree work are eligible for the Lifetime Learning Credit.

Employee Business Expense: Taxpayers who take courses to improve their job skills, to satisfy their continuing education requirements for their professional credentials, or for reasons otherwise related to their current job, may deduct the cost of their tuition, associated fees, books and supplies, and mileage from work to school. The expenses are not deductible if the course is not job-related or would qualify the taxpayer for a job in a new field.